Global markets begin week with concerns over US banking sector

By Murat Aslan

ISTANBUL (AA) — Global markets started the week with concerns about the US banking sector after the collapse of Silicon Valley Bank (SVB) and Signature Bank, while state intervention supported positive pricing.

The biggest bank failure since the 2008 financial crisis raised volatility in assets and pricing for the US Federal Reserve's (Fed) monetary policy was also significantly altered.

According to a joint statement from the Treasury Department, Fed, and the Federal Deposit Insurance Corporation (FDIC) on Sunday, Silicon Valley Bank depositors will have access to all their money starting on Monday.

"Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system," said the joint statement.

US President Joe Biden weighed in on the matter on Sunday, saying that Treasury Secretary Janet Yellen and National Economic Council Director Brian Deese worked diligently with banking regulators to address problems at Silicon Valley Bank and Signature Bank, promising that this solution would ensure that taxpayer dollars would not be put at risk.

In a statement, Biden said: "the American people and American businesses can have confidence that their bank deposits will be there when they need them."

While these steps boosted risk appetite in stock markets, expectations that the Fed would raise interest rates by 50 basis points at next week's meeting have faded.

Goldman Sachs said analysts no longer expect the Fed to hike rates at its meeting on March 22.

The US dollar weakened at the start of the week amid views the Fed would refrain from accelerating its pace of rate increases.

The dollar index fell to 103.8, the lowest level since Feb 16.

Investors are meanwhile expected to focus on the US inflation rate, due on Tuesday.

Futures in the European market started the new week on a positive note, with Thursday's monetary policy decisions by the European Central Bank (ECB) in the focus of investors.

The bank had been expected to increase interest rates by 50 basis points with a 76% probability. However, analysts said expectations for the ECB rate hike may change in parallel with pricing in the US.

A mixed course was observed in Asian stock markets on Monday and the fact that the Chinese government did not change the officials of the People's Bank of China (PBoC) was welcomed by markets.